DURHAM – Spoonflower, headquartered in Durham, experienced incredible growth throughout 2020, according to Michael Jones, CEO, which led to “a lot of inbound calls from potential investors, acquirers.”
The company’s leadership team and board of directors looked long and hard at the best path forward to fuel the creative economy and the makers and creators that the company serves, he added.
Would the company raise money from existing investors, and invite others to join alongside? Would the company seek a major investment from a strategic partner or a growth-focused venture capital firm? Or would the company consider an acquisition, and if so, from what type of firm?
Those were the questions under consideration, said Jones, as the company sought to prepare for its future and the future of its employees and customers, looking between three and five years out.
Where the company landed: an acquisition deal worth $225 million, where Spoonflower becomes a division of Shutterfly, and grows its business in the Triangle.
Shutterfly buying Durham-based Spoonflower for $225M – more jobs to RTP?
“World leader in the personalization as it relates to photography, and they really want to get into the world of the creative economy,” said Jones, about Shutterfly. “A lot of the challenges that we have, in terms of growing and scaling, they’ve already done that, in the photography world.”
“We met each other, and honestly, from almost day one, there was a lot of synergistic conversation,” said Jones, who began his role as CEO of Spoonflower at about the same time as Hilary Schneider became CEO of Shutterfly. “For us, the other big thing, they have 21 million active customers, and those customers buy things that you hang on walls, and we sell wallpaper, and the home decor segment is their fastest-growing segment,” Jones added.
The partnership was an important aspect of the deal, as was the synergy between the two companies.
“Shutterfly is a great partner for Spoonflower in all respects,” said David Jones of Bull City Venture Partners, an investor in Spoonflower, who will exit the ownership group after the deal closes, and who will no longer be active on the company’s board of directors. “They bring a huge audience and the printing/factory expertise that will enable Spoonflower to thrive and grow.”
“No doubt, Spoonflower will continue to grow the business, Triangle presence under the Shutterfly parent,” said David Jones.
Shutterfly underestimated the role that fabric plays in the creative economy, said Michael Jones, “until they met us.”
“Fabric is the tip of the arrow of what people use in the creative economy,” he said. “Fabric is at the center of it.”
The deal makes a ton of sense for both parties, said Michael Jones. “Not only are we a great business, fit-wise, but the Triangle is a really good, strategic area to be in for the company.”
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What growth might look like
“For the short-term, we’re here in our 110,000 square foot space, and we’ve committed to hiring 100 people this year, which we will continue to do,” said Michael Jones, Spoonflower CEO, who will report directly to the CEO of Shutterfly, Hilary Schneider, after the deal closes. “We are starting to think carefully about what our employees want, and what we’re hearing is work-from-home flexibility.”
The company lists about a half dozen roles for which they’re hiring on its career website, and the company is seeking to grow in the Triangle, due to the talent that is here already, and the talent that may be attracted to relocate here for an opportunity, said Jones. “As we go into 2022, this region will be really important for us,” he noted.
“We’ve had the big announcements of Apple and Google coming to the area, now we have Shutterfly, which is another large digital company that has roots in personalization and e-commerce,” said Scot Wingo, co-founder and CEO of Spiffy, and a member of the Spoonflower board of directors. “In the announcement, they explicitly stated that they are keeping the team here and I imagine they will continue grow it,” he added.
“I’m a big believer that we need a big consumer win in the Triangle and Spoonflower is not only the biggest consumer oriented co-exit we’ve had in the Triangle,” said Wingo, “but brings one of the biggest players in consumer internet into the region in a big way.”
Wingo, who also led ChannelAdvisor, noted that a few executives on the Spoonflower team, including Jones, are also ChannelAdvisor “alumni,” as he put it. “As entrepreneurs, one of the first lessons you learn is that startups are not a zero sum game,” said Wingo. “One way to measure your success is if you can help other folks along the path to success.”
That’s how Wingo sees his role, on a personal level, noting that he feels excited to have had a small degree of influence on that group of now-Spoonflower executives and senior-level employees, that they chose to remain in the Triangle, and to grow a startup in the region, steering the company to success.
Jones plans to follow in Wingo’s footsteps.
“I want to help it grow, I want to be one of the CEOs to help the Triangle become a central hub for success,” he said. “This is a great win for the area, I’m excited about it.”
Jones committed to operate the company for a minimum of two years, following the deal, but believes he will stay longer.
“If you take a step back and look at the big picture,” said Jones, discussing how he believes Spoonflower might compete for software engineering talent in the Triangle when there’s already a robust technology economy, and Apple and Google are ramping up for their new facilities in the region.
“When you add those two companies, more people want to come here, more people will stay here when they graduate,” said Jones. “From an investment perspective, you may get more people interested in considering investing here.”
“There could be short-term competitive pressure,” said Jones, but the big picture, the long-term picture, of the Triangle’s economy, is strong.
